Australian banks rediscover value of branches

By KEVIN TAYLOR

Australian banks are placing new value on branches but New Zealand subsidiaries are not expected to start reopening branches soon.

Since 1994 more than 600 New Zealand bank branches have closed.

Australian banks are rethinking closures - apparently rediscovering branches are an effective way to communicate with customers and realising that most sales still go through them.

The Australian reports the change in thinking is driven partly by the success of niche operators. Regulatory pressure, customer backlash and disappointing online sales have also played a part.

The report came in the middle of the Australian federal election campaign in which banking is a big issue. Labor wants to force banks to meet social responsibilities and promises to slow branch shutdowns.

But New Zealanders have taken to electronic banking in droves and there are no signs of any reversal in the trend of closures.

Massey University Centre for Banking Studies director David Tripe said Australians made a lot more use of branches than New Zealanders: "I'm forever amazed to see people queuing up at bank branches over there." He said that comparatively more branches had closed in New Zealand than Australia, though the pace had slowed.

But there was no sign of banks thinking they had shut too many here.

Mr Tripe said the People's Bank would have the largest branch network in New Zealand when it opened - about 300.

It would dwarf the network of the country's biggest overall bank, WestpacTrust, which had just over 200.

The latest KPMG Financial Institutions Performance Survey found that 639 of New Zealand's bank branches - 42 per cent - had closed since 1994. It also noted the pace of closures had slowed. Last year 20 branches shut their doors - a 2 per cent decrease, compared with a 10 per cent decline in 1999.

ANZ spokesman Steve Fisher said it was now upgrading branches. There was a recognition that many customers liked to do banking face-to-face.

WestpacTrust spokeswoman Jane Anderson said most of its branch closures were completed some years ago.

The bank was now happy with its branch numbers and was even opening a few - such as a new one at Botany Downs in Auckland.

However, internet and telephone banking was taking off, she said. Since last April 133,000 customers had signed on to its internet banking system.

The Finance Sector Union said customers were given fewer options in New Zealand - and Australians also tended to be more ready to complain to their banks.

General-secretary Don Farr said banks had wanted to force people on to electronic banking by making them queue - leaving union members to face angry customers.

Finsec had been saying for years that to acquire customers banks needed the personal touch. But he saw no evidence of a reversal in closures.